UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1996.
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM
_____________________________ TO
_________________________________.
Commission File Number: 0-17773
___________________________ATS Money Systems,
Inc._______________________
(Exact name of small business issuer as specified
in its charter)
____________Nevada_____________
___________13-3442314__________________
(State or other jurisdiction of (I.R.S.
Employer Identification No.)
incorporation or organization)
25 Rockwood Place________Englewood, New
Jersey________07631______________
(Address of principal executive offices)
(Zip Code)
________________________201/894-1700________________________
___________
(Issuer's telephone number)
Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
__X__Yes _____No
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
As of May 14, 1996, - 5,876,486 shares of common
stock, $.001 par value.
Exhibit index on sequentially numbered page
___11_______.
Total number of pages ____12______.
Part I. FINANCIAL INFORMATION
Item I. Financial Statements
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[LEGEND]
ATS MONEY SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31 DECEMBER 31
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ASSETS: 1996 1995
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 919,067 $ 164,548
Trade accounts receivable, less allowance
for doubtful accounts of $92,363 in both
1995 and 1996 2,455,520 1,560,626
Inventories 526,762 520,996
Prepaid expenses and other current assets 424,627 172,221
Total current assets 4,325,976 2,418,391
PROPERTY - At Costs:
Office furniture 75,950 52,912
Office machinery and equipment 111,237 100,520
Subtotal 187,187 153,432
Less Accumulataed depreciation 75,693 68,796
Property - net 111,494 84,636
OTHER ASSETS:
Software costs, less accumulated amortization
of $408,896 in 1996 and $361,641 in 1995 659,071 631,568
Deposits 65,073 65,073
Total other assets 724,144 696,641
_________ _________
TOTAL $ 5,161,614 $ 3,199,668
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 135,038 $ 155,808
Accrued expenses 834,956 418,058
Deferred revenue 1,553,980 247,602
Other liabilities 134,282 115,636
_________ _______
Total current liabilities 2,658,256 937,104
LONG TERM LIABILITY:
Deferred Credit, less accumulated amortization
of $46,399 in 1996 and $39,211 in 1995 238,828 245,956
STOCKHOLDERS' EQUITY:
Common stock - $.001 par value, 25,000,000
shares authorized, 5,876,486 shares issued
at March 31, 1996 and 5,835,794 shares
issued at December 31, 1995 5,876 5,836
Additional paid-in capital 2,370,078 2,319,920
Accumulated deficit ( 111,324) ( 309,048)
Treasury stock - 100,000 shares at par value ( 100) ( 100)
___________ ___________
Total stockholders' equity 2,264,530 2,016,608
___________ ___________
TOTAL 5,161,614 $ 3,199,668
See notes to consolidated financial statements.
</TABLE>
<TABLE>
[LEGEND]
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
MARCH 31 MARCH 31
1996 1995
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REVENUE:
Equipment and systems sales $ 1,526,515 $ 984,997
Equipment maintenance and service revenue 644,618 563,292
Total revenue 2,171,133 1,548,289
COST AND EXPENSES:
Cost of goods sold and service expense:
Equipment and systems 606,320 509,179
Equipment maintenance and service 257,963 192,061
Selling, general and administrative expenses 991,810 929,019
Total costs and expenses 1,856,093 1,630,259
INCOME (LOSS) FROM OPERATIONS 315,040 (81,970)
INTEREST INCOME 3,684 9,429
__________ ___________
INCOME (LOSS) BEFORE INCOME TAXES 318,724 (72,541)
INCOME TAXES 121,000 -
NET INCOME (LOSS) $ 197,724 $ (72,541)
EARNINGS (LOSS) PER COMMON SHARE:
Primary and fully diluted $.03 ($.01)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 5,919,161 5,823,572
See notes to consolidated financial statements
</TABLE>
<TABLE>
[LEGEND]
ATS MONEY SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTH PERIODS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
MARCH 31 MARCH 31
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 197,724 $ (72,541)
Adjustments to reconcile net income to cash
provided by (used in) operating activities;
Depreciation and amortization 47,024 38,830
Compensation expense recorded for common
stock issued under stock option plan* 50,198 -
Changes in current assets and liabilities:
Trade accounts receivable - net ( 894,894) ( 30,576)
Inventories ( 5,766) ( 50,723)
Prepaid expenses and other assets ( 252,406) ( 578,806)
Accounts payable - trade ( 20,770) 31,532
Accrued expenses 416,898 16,375
Deferred revenue 1,306,378 970,609
Other liabilities 18,646 11,924
__________ __________
Net cash provided by operating activities 863,032 336,624
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software development costs ( 74,757) ( 44,575)
Property additions ( 33,756) ( 20,569)
Net cash used in investing activities ( 108,513) ( 65,144)
_________ _________
NET INCREASE IN CASH AND
CASH EQUIVALENTS 754,519 271,480
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 164,548 527,369
_________ _________
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 919,067 $ 798,849
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Income Taxes $ 90,000 $ -
*Non cash transactions - common stock
issued under stock option plan $ 50,198 $ -
See notes to consolidated financial statements.
</TABLE>
ATS MONEY SYSTEMS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
March 31, 1996
Note 1 - Unaudited Information:
In the opinion of management, the accompanying
unaudited financial statements reflect all adjustments (which
comprise only normal recurring accruals) necessary to present
fairly the Company's consolidated financial position as of March
31, 1996, and the results of its operations and cash flows for
the three month period ended March 31, 1996 and 1995.
Information included in the consolidated balance sheet as of
December 31, 1995 has been derived from the Company's audited
financial statements in its Annual Report on Form 10-KSB for the
year ended December 31, 1995, to which reference is made.
Note 2 - Inventories
Inventories are stated at the lower of cost or
market. Cost is determined by the first-in, first-out method
for machine parts and specific identification for machines held
for sale.
Note 3 - Capitalized Software Costs
The Company capitalizes computer software development
costs in accordance with the provisions of Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed".
Costs incurred to establish the technological feasibility of
computer software are expensed as incurred. Costs incurred for
product enhancements, subsequent to establishing technological
feasibility, are capitalized and stated at the lower of cost or
net realizable value. Capitalized costs are amortized using the
straight-line method over five years, which approximates the
estimated remaining useful life of the product. Amortization of
computer software costs amounted to $47,255 and $41,629 for the
three month period ended March 31, 1996 and 1995, respectively.
Note 4 - Revenue Recognition
Revenue from equipment and systems sales is
recognized upon shipment to the buyer and satisfaction of
related obligations by the Company. Revenue from software
licensing is recognized on delivery of the software if
collectibility is probable and any remaining insignificant
obligations of the Company are accounted for by deferring a pro
rata portion of revenue and recognizing it either ratably as the
obligations are fulfilled or on completion of performance or by
recording a current year expense for the remaining costs
associated with completing the project.
Note 5 - Equipment Maintenance and Service Revenue
Equipment maintenance and service revenue is
recognized as earned over the term of the contract, which is
generally a maximum of one year in length. Deferred revenue
represents the unearned portion of equipment maintenance and
service fees.
Note 6 - Income Taxes
The Company accounts for income taxes under the
provision of Statement of Financial Accounting Standards No. 109
("SFAS 109"), "Accounting for Income Taxes".
Deferred income taxes reflect the net tax effect of
temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes, and operating loss carryforwards.
The income tax provision for the three month periods
ended March 31, 1996 and 1995 consisted of $121,000 and $0
respectively. The March 31, 1996 tax related solely to current
federal and state income tax expense.
Note 7 - Stockholders' Equity
Common Stock - The authorized capital stock of the
Company consists of 25,000,000 shares of noncumulative, voting,
common stock, with a par value of $.001 per share.
Stock Option Plans - In January 1993, the Company
adopted a common stock incentive option plan (the "Plan"),
approved by the stockholders at the annual meeting in May 1993,
which authorizes the issuance, within ten years, of options
covering up to 280,000 shares of common stock to certain
employees and other individuals of importance to the Company.
The Plan is intended to provide incentive to continued
employment of certain employees and other individuals by
enabling them to acquire a proprietary interest in the Company.
Options granted under the Plan may be either "incentive stock
options" or "non-qualified stock options." Incentive stock
options, granted only to certain employees of the Company,
expire within ten years (five years for a 10% beneficial owner
of the Company's securities) from the date granted and are
exercisable from time to time in accordance with the terms of
such options. The exercise price of an incentive stock option
must be at least equal to the fair market value of the common
stock on the date of grant (110% for a 10% beneficial owner of
the Company's securities). Non-qualified stock options can be
granted to certain employees of the Company and advisors and
consultants to the Company. Such stock options are exercisable
on or after the date of grant and the exercise price is not
limited and may be below fair market value.
The Company did not grant any options in 1995,
however, on October 31, 1995, an additional 200,000 shares were
authorized. During 1995, 15,653 options were exercised at a
price of $.28125 per share.
On September 27, 1995, the Board of Directors
approved the ATS Money Systems, Inc., 1995 Director Stock Plan
pursuant to which the Company's nonemployee directors, upon
first being elected to the Board, would be granted 10,000 shares
of the Company's common stock, and on the date of election of
directors at each annual stockholder meeting thereafter (if such
person continues to serve as a director) would be granted
options to purchase 5,000 shares of the Company's common stock
with an exercise price equal to the then fair market value of
such shares. The Plan was approved at the 1995 Annual Meeting
of Stockholders. The nonemployee directors were granted 30,000
shares effective October 31, 1995, which were issued on January
2, 1996. Another 10,000 shares were granted and issued on
February 27, 1996.
On February 3, 1996, when the fair market value of
the common stock was $1.03125 per share, the Company granted
46,001 incentive stock options at such price ($1.1344 per share
for one employee). During 1996, 692 of the incentive stock
options were exercised at a price of $.28125 per share. At
March 31, 1996, there were 226,301 options outstanding at prices
ranging from $.28125 to $1.375 per share of which 119,666 were
exercisable.
Note 8 - Commitments and Contingencies
At March 31, 1996, the Company was committed under
noncancelable, operating leases for office space, automobiles
and office equipment, expiring at various dates through April
2000, requiring minimum rental payments as follows:
Year Ending December 31:
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1996 (balance of year) $ 253,261
1997 311,666
1998 297,195
1999 144,904
2000 40,744
$ 1,047,770
</TABLE>
Rental expense for the three month periods ended
March 31, 1996 and 1995 was $88,191 and $77,575 respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
OF OPERATION
Reference is made to Item 6 - "Management's
Discussion and Analysis of Plan of Operation," contained in the
Company's Annual Report on Form 10-KSB for its year ended
December 31, 1995 for a discussion of the Company's financial
condition as of December 31, 1995 including a discussion of the
Company's anticipated liquidity and working capital requirements
during 1996.
COMPARISON OF CONSOLIDATED OPERATIONS FOR THE THREE
MONTHS ENDED MARCH 31, 1996 TO THE THREE MONTHS ENDED MARCH 31,
1995.
Total revenues for the first quarter of 1996 were
$2,171,133 which was an increase of $622,844 (40.2%) over the
first three months of 1995. The majority of the increase related
to system and equipment sales which increased $541,518 (55.0%)
to $1,526,515 for the quarter. This increase was comprised of
Innovative Electronics, Inc., which had a $306,770 increase and
ATS Money Systems, Inc., - Parent Company with an increase of
$234,748. Maintenance revenues were $644,618 for the first
quarter of 1996. This was an increase of $81,326 (14.4%) from
the prior year's first quarter and was primarily due to an
increased number of systems of large retailers being under
contract.
Cost of equipment and system sales decreased from
51.7% of sales in the first three months of 1995 to 39.7% in the
current period. This was due to a greater volume of software
sales at both Innovative Electronics, Inc., and ATS Money
Systems, Inc. In most cases, the cost of this software had been
capitalized. Cost of maintenance dropped from 43.4% of revenues
in the first quarter of 1995 to 40.0% in the first three months
of 1996 primarily due to a larger volume of retail systems and
increased maintenance revenues from Innovative Electronics,
Inc., which had lower costs than ATS Money Systems, Inc.
Selling, general and administrative expenses were
$991,810 in the first quarter of 1996 compared to $876,103 in
the comparable period of 1995. This is an increase of $115,707
(13.2%) and is comprised of a $64,848 increase at ATS Money
Systems, Inc., and a $50,859 increase at Innovative Electronics,
Inc. The Parent Company's increase was due to compensation
expense for common stock granted to the board of directors as
well as additional rent and telephone expense due to additional
space and telephones and an increase in legal fees. In the
first quarter of 1995, Innovative Electronics, Inc., recovered
certain accounts receivable which had previously been written
off. This had the effect of lowering 1995 expenses; this
situation did not exist in the first quarter of 1996, creating a
net increase in expense. Additionally, trade show expenses in
the first quarter of 1996 were higher than 1995.
Interest income for the first quarter of 1996 was
$3,684 compared to $9,429 in the first quarter of 1995. This
decrease of $5,745 (60.9%) was due to both smaller amounts
available for investment and lower interest rates.
As a result of the foregoing, the first three months
of 1996 produced income before taxes of $318,724 compared to a
loss of $72,541 in the first quarter of 1995. The provision for
income taxes in the current quarter was $121,000 with after tax
profit of $197,724 compared to the $72,541 loss in the first
quarter of 1995.
Financial Condition
At March 31, 1996, cash and cash equivalents amounted
to approximately $919,000 and, in addition, the Company did not
have any outstanding borrowings. During the first three months
of the year, many customers prepay their annual maintenance
contract which increases the Company's cash and,
correspondingly, its deferred revenue liability.
In April 1996, First Union National Bank renewed a
$750,000 discretionary line of credit for the Company's
short-term needs, at an interest rate equal to such bank's base
rate plus 1/2%. All advances under this line of credit are
required to be secured by a lien on substantially all of the
Company's assets. The Company has not drawn against this line
of credit.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11. Statement re: computation of per share
earnings - not required since such computation
can be earlier determined from the material
contained in this report on Form 10-QSB.
27. Financial Data Schedule.
(b) No reports on Form 8-K were filed during the
quarter for which this reports was filed.
SIGNATURES
In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ATS Money Systems, Inc.
(Registrant)
___________
May 14. 1996 ____________ _________________________________
(Date) Gerard F. Murphy
Chief Executive Officer
President
___________May 14, 1996
_ _________________________________
(Date) Joseph M. Burke
Vice President - Finance
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<ARTICLE> 5
<LEGEND>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of March 31, 1996 and the Consolidated
Statement of Operations for the three months ended March 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 919,067
<SECURITIES> 0
<RECEIVABLES> 2,547,883
<ALLOWANCES> 92,363
<INVENTORY> 526,762
<CURRENT-ASSETS> 4,325,976
<PP&E> 187,187
<DEPRECIATION> 75,693
<TOTAL-ASSETS> 5,161,614
<CURRENT-LIABILITIES> 2,658,256
<BONDS> 0
<COMMON> 5,876
0
0
<OTHER-SE> 2,258,654
<TOTAL-LIABILITY-AND-EQUITY> 5,161,614
<SALES> 1,526,515
<TOTAL-REVENUES> 2,171,133
<CGS> 606,320
<TOTAL-COSTS> 864,283
<OTHER-EXPENSES> 991,810
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,684
<INCOME-PRETAX> 318,724
<INCOME-TAX> 121,000
<INCOME-CONTINUING> 197,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 197,724
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
